House and Senate Democrats are escalating calls for an historic federal bailout of state and local governments coping with significant revenue losses due to the coronavirus outbreak.
The price tag for the aid Democrats propose is massive: $500 billion for state governments plus “a very big figure,” for municipalities, Speaker Nancy Pelosi, a California Democrat, told reporters Tuesday.
And there’s more: Pelosi said lawmakers may seek a $200 billion increase in Medicaid spending.
Congress last month passed legislation providing $150 billion in federal aid to states. A separate measure Congress passed earlier in March provided a temporary 6.2% increase in federal Medicaid spending.
“And now we need more,” Pelosi said Tuesday in a press call that featured union workers who could face layoffs due to underfunded states and municipalities.
House Democrats likely have the support within their own party to pass a big spending bill that includes many of their wish list items.
But the Senate is controlled by Republicans, and Majority Leader Mitch McConnell has called Pelosi’s demands “tangential, left-wing daydreams.”
McConnell has announced his own priorities for the next round of coronavirus legislation. McConnell said he’s seeking new laws to “expand and strengthen” protections for businesses and healthcare facilities from opportunistic lawsuits.
“While our nation is asking everyone, from front-line healthcare professionals to essential small-business owners to major employers, to adapt in new ways and keep serving, a massive tangle of federal and state laws could easily mean their heroic efforts are met with years of endless lawsuits,” McConnell said this week.
McConnell said in an interview on the Guy Benson radio show Monday, “there probably will be,” a new federal spending package for state and local governments suffering from coronavirus-related budget shortfalls. President Trump earlier this month also pledged to provide state and local aid in the next bill.
Democrats said the GOP will be under pressure to back their state and local spending plan because governors in both parties support it and are providing Democrats with funding requests to meet their needs.
But Congressional Republicans and the president aren’t anywhere close to green-lighting the spending plan proposed by Democrats, and they are setting conditions in exchange for any new state or local spending.
“We need to make sure that we achieve something that will go beyond simply sending out money,” McConnell told Benson.
McConnell wants to incorporate new liability protections for employers.
Trump on Tuesday also suggested there needed to be a trade-off for new state and local funding.
Trump wants payroll tax cuts, which Democrats have previously rejected.
And Trump said there should be an elimination of sanctuary city policies some states enforce to protect illegal immigrants from federal immigration officers.
Republicans are also opposed to states using the money to bail out their troubled pension funds.
“I think there’s a big difference between the state that lost money because of COVID and the state that’s been run very badly for 25 years,” Trump told reporters during a meeting with Florida’s Republican Gov. Ron DeSantis. “There’s a big difference, in my opinion. And, you know, we’d have to talk about things like payroll tax cuts, we would have to talk about things like sanctuary cities, as an example. I think sanctuary cities are something that has to be brought up where people that are criminals are protected. They are protected from prosecution. I think that has to be done. I think that’s one of the problems that the states have.”
McConnell last week said he supported examining a change to the law that would allow states to declare federal bankruptcy rather than use federal tax dollars to prop up the underfunded pension programs.
“We do want to help them with expenses that are directly related to the coronavirus outbreak,” McConnell told Benson on Monday. “But we’re not interested in helping them fix age-old problems that they haven’t had the courage to fix in the past.”
Democratic leaders on Tuesday rejected the GOP proposals.
“I don’t think at this time of the coronavirus that there’s any interest in having any less protection for our workers,” Pelosi told reporters who asked about McConnell’s plan to try to limit employer liabilities.
Pelosi also dismissed McConnell’s desire to block states from bailing out pension funds with federal money.
She blamed a former GOP governor for the pension funding debacle unfolding in Illinois and said new federal funding for state and local governments is intended to deal with the impact of the coronavirus epidemic and nothing else.
Pelosi dismissed placing restrictions on new spending in order to satisfy Republicans who want to limit how governments could use the federal aid.
“We don’t need any prescription about anybody’s methodology, or just excuses not to do the job,” Pelosi said. “It’s really sad, it’s disgraceful. Because there is such tremendous need.”
